I own a van worth 20k, a house worth almost half a million, and have about 400k in mortgage, and no real savings.
I make a bit over 5k a month before tax from work, and maybe another 3k from renting rooms in my house
What happens if I run someone and do 500k$ worth of damage but only have 100k$ insurance ?
What if I do a million dollars damage, have 600k$ insurance, 500k$ in assets, but also 400k mortgage I cannot pay without those assets(need the house for rent, and the van for work

You need what's called an Umbrella policy... it covers you in the exact cases you mentioned. And they can be fairly cheap. Worth a call to your insurance agent,

I think smoothy is correct.
But as far as I know the courts would determine the damages without regard to the value of your assets. I surmise that you would have to negotiate a payment plan acceptable to the court and the injured party(s). I am not an attorney but I know that it is a situation you don't want to get into.

I agree about the umbrella policy, especially because of your rental business. Make sure that your home owner's policy is consistent with the fact that you are renting out rooms, and has sufficient coverage in case you are sued over death or injury that a tenant might sustain while renting from you. In general your liability insurance coverage on your home owner's and auto policies plus umbrella policy ought to be at least as much as your net worth.

Hello ben:

Smear is right. The courts don't care how much insurance you have.. If the judgment is more than your assets, you'll wind up with NO assets and huge bill.

Smear is wrong about a payment plan, though.. They'll take it ALL right now. Sure, you can make payments after there's nothing for them to take. Who wouldn't accept that?

excon

ebaines, why deos it need to be as high as my assets?
Excon, do I care if I have more insurance?
If the judgment is higher than my assets +insurance than I don't have anything left no matter the insurance sum right?
So even if my net assets are under 200k(assets- debts) I need a multi million liability insurance to be sure I don't find myself with nothing right?

Quote:

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Originally Posted by BenAssa

ebaines, why deos it need to be as high as my assets?

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I suggested that your liability coverage should be about the same as your net worth. That's NOT the same thing as your assets, but rather assets minus liabilities. You currently seem to have about $120K in net worth ($100K in the home plus $20K in a van), so getting about $150K in liability insurance with both your auto and homeowner's policy is probably OK. If in the future your net worth climbs above $300K then an umbrella policy would be recommended.

I still don't understand the connection between net-worth and liability
I can easily have a 200k liability insurance, run over someone have a judgment of 500k, and loose everything I own right?
Or am I missing something

Hello B:

If you figure you'll never make a nickel after you've been bankrupted, then you only need to cover what you're worth.

excon

Well they can garnish 25 percent or more of your pay till you grow old and die. Your choice,

And if you don't care about losing your home, your cars and all you worked for, I don't care either to be frank, I would be happy moving into your home if you hit me and can't pay for my damages.

Ex-thanks for the vote of confidence.
If you owed a judgment for a million bucks from a guy that earned 250k per year but only had a worth of 50k at the time--you would take his 50k and his ability to earn his 250k per year away, put him on the street and be happy?
You wouldn't entertain a proposal for him to pay you 100k or 150k per year for the next x years?
There are in fact, payment plans worked out related to judgments based on my research.

Quote:

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Originally Posted by smearcase

Ex-thanks for the vote of confidence.
If you owed a judgment for a million bucks from a guy that earned 250k per year but only had a worth of 50k at the time--you would take his 50k and his ability to earn his 250k per year away, put him on the street and be happy?
You wouldn't entertain a proposal for him to pay you 100k or 150k per year for the next x years??
There are in fact, payment plans worked out related to judgments based on my research.

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As a court ordered Garnishment... maybe. As a gentlemen's agreement... never. Most people aren't gentlement for long in that situation.

Most people don't take long to find reasons to not pay what they owe if they are allowed a way out of it. People find ways to duck court ordered garnishments every day too.

And I actually know someone who has been getting judgements periodically renewed against an uninsured drunk that caused an accident over 40 years ago and has gone out of their way to avoid paying what they owe the entire time. For a sum that is far, far less than even $100K

Quote:

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Originally Posted by smearcase

you would take his 50k and his ability to earn his 250k per year away, put him on the street and be happy?

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Hello again, smear:

Nahhh. Not me. But most plaintiff's aren't as wonderful as I am.

excon